The European Banking Authority called on the EU Banks to Shunt Digital Currencies

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The European Banking Authority called on the EU Banks to Shunt Digital Currencies
The European Banking Authority called on the EU Banks to Shunt Digital Currencies

The European Banking Authority called on the EU Banks to Shunt Digital Currencies

Bitcoin is facing another onslaught from the European Banking Authority as it has requested the EU to develop safeguards for trading platforms and start groups to oversee each internet currency. This according to the authority is aimed to ensure that no individual can manipulate “the integrity of a particular virtual currency scheme and its key components.”

The authority also says that meantime, banks shouldn’t buy, hold or sell virtual currencies. The request to European Union banks that they should shun virtual currencies such as Bitcoin until rules to prevent abuses are put in place, according to Bitcoiners is though not surprising, is quite unfortunate, particularly, when it is expanding fairly well in the region.

Currently, Bitcoin Finance conference and expo is being held in Ireland. Several such events have been held in various EU countries in past and many organizations and shops in the region accept the digital currency as well. Now that the policy guidelines have been issued by the European Banking Authority, days will be tough for Bitcoin.

The European watchdog identifies More than 70 risks linked to the currencies

The authority has so far identified more than 70 risks linked to the currencies which according to it may cause a lot of loss for the users. It says that fraud by exchanges, sudden drops in value due to exchange-rate fluctuations, losses caused by changes to software protocols underpinning the currency, identity theft, etc. are some major chinks in the armor of Bitcoin.

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In the views of the European Banking Authority the widespread use of the currencies could also make it harder for central banks to steer the economy by making the effects of monetary policy harder to predict. Understanding the gravity of the situation the regulatory body called on the EU to develop safeguards for trading platforms.

It looks the authority has taken cognizance of what happened to Mt. Gox which claims that it had lost 850,000 Bitcoins worth millions of dollars. Several governments took action against the digital currency as they realized that it was being used for money laundering. For instance, China’s central bank barred financial firms from handling virtual currency transactions last year.

In its press note, the European Bank Authority says that a regulatory approach to addressing the risks it has identified would require a substantial body of regulation, some components of which would need to be developed in more detail. Therefore, it added that the EU should consider extending the scope of anti-money laundering law to better cover virtual currencies.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com